We all have our dreams. Everybody wants to succeed, at least in our minds but not everybody will. Below is a list of 25 actions you should take if you want to improve your personal finance situation.
1. Review your financial position:
Take a pen and paper, sit down and review your financial activities; from your income earnings to spending. Break everything down into small segments. It could be that your total expenditure outweighs your income. Simple Guide: Create a credit and debit list. Every part of your income, no matter how little, should come to the credit side while expenditures (outgoings) come to the debit. Sum each side up. If your debit is over 30% of your credit, do you still wonder why that financial dream of yours was out of reach?
2. Create a financial checklist:
The best way to create this checklist is to break each financial matter down into months (includes insurances, mortgage, rent etc) Many people have this false belief that they have everything sorted out in their heads. The more reason they fail because human beings are susceptible to memory loss. Sort them out in black and white instead, and a new level of motivation will come on you each time you look at the checklist. Alternatively, tools such as PocketGuard and Spendee can help you do this.
3. Set specific financial goals:
After creating the checklist, the next step is to set your financial goals complete with specific dates. That is only when your wishes become goals since the dates act as deadlines thereby putting you on delightful pressure to beat them. Any goal without a specific date of achievement is not a goal. You are merely wishing. Sadly, this is what many people do. By specific, for example- I will make $60k by 24 November 2021.Then it becomes a goal that you can wake up every morning and chase around.
4. Have a savings plan (budget):
The failing of many people is that they are never faithful with the plan. This shows indiscipline. Learn to set and work within your plan. That way, you can meet most of your financial obligations. Otherwise, will only put you in bad debt and make you miserable. If you cannot plan in black and white, there are wonderful digital tools and apps such as YNAB and Mint. One thing you must never do is to simply budget in your head.
5. Spend what is left after you have saved:
Learn to live by this rule today. For every dime you earn, save at least 10% of it. Now, this is the difficult part: many people aren't disciplined enough to do this. More so for Entrepreneurs as the key to achieving this is to separate your business income from your personal finance
6. Leverage on good debts and avoid bad debts:
Everybody should like debt. This is a principle of the wealthiest people in the world. Good debt brings you more cash flow and if well managed, sets you towards financial freedom. Bad debt on the other hand, brings you unneeded luxuries, put serious pressure on you and can make you miserable. Good debts are incurred towards fulfilling rewarding financial obligations like the purchase of businesses, investment and stocks or real estate; these are things that will compound your financial interests over time and make you independent. Bad debts are taken out to buy non-essential luxuries such as cars, holiday trips and expensive dinners. These luxuries don't compound wealth. Rather, they take what you already have. Decide which one you want.
7. Pay off your smaller debts first:
By now, you must be saying 'but I am in debt already. My debtors are breathing down my neck'. All well and good. Make it a point of focus to liquidate your bad debts. Start by making a list of your bad debts in order of their sizes. Then settle the smaller debts first. Any debt that is fully settled should be cancelled out before moving to the next. The logic behind this is simple. The smaller the debt, the easier it is to pay off. With each debt cancelled out, the more confident you will become of liquidating the bigger ones. This confidence brings with it desire not to keep going through the show of cancelling out debts every year. In other words, you'll become a better manager of your finances.
8. Live your means:
This must be a strange one. I have heard many people advocating that people should live below their means in order to have reasonable savings. Well, I actually believe people should live their means. If you can afford to conveniently buy out a business, why not? The key to living your means is convenience. In measuring your convenience level at taking on situations, you must be truthful to yourself about your financial situation. You might be on $10k per month salary and feel you can live in a two bedroom apartment in the city. You should calculated the other supervening expenses like monthly food, clothing, bills and transportation to know how much you are left with to contribute towards the means you want to live.
9. Avoid having entitlement mentality:
Nobody owes you anything in life. So quit that lazy mindset. You are solely responsible for the decisions you make; for your successes and failures. Once this is firmly ingrained in your mind, the zeal not to fail will become a greater motivation that pushes you towards making smart financial choices. You will learn the act of taking responsibility. The most successful entrepreneurs don't sit down and wait for goodwill from some family members or friends. They struggle their ways through web of failure until the elusive success is captured. Then they work harder to keep the success. You should also have that mindset.
10. Avoid the lottery:
This might not go down well with some lottery lovers but if you don't have firm control of your personal finance, then stay off the lottery. You spend money time and time again in the hope of becoming lucky and hitting the jackpot. But what if you don't? Let us even assume you win. Have you taken stock of how much you have contributed to the lottery over the months and years and if what you won is it up to your contribution? A few will be lucky to hit it big. However, a vast majority of people won't.
11. Operate 3 designated bank accounts:
I am advocating this because most times we tend to draw from a single bank account to solve our personal financial challenges. The danger in this is that such practice is an enemy of financial planning and often runs people dry. If you are serious about securing your financial future, then have 3 bank accounts where you save at different times. The first should be for savings and this could be your salary account. The second is for emergency while the third is for philanthropy. Since you're working on a budget, you know which account to go to on each occasion and discipline will stop you from touching the other accounts when you have no need to. Finance experts like Robert Kiyosaki advocate this strategy. I recommend it also.
12. Track your net worth always:
Do you really know how much you are worth? The problem is many people have a false sense of security. They believe selves to be worth more than they actually are. People who take control of their personal finances make it a habit to track their net worth always. Quit blushing over your assets. Try removing your liabilities from those assets to get an idea of how much you are really worth. Whatever remains after you have subtracted your liabilities from your assets is what you are truly worth.
13. Diversify your investment holdings:
Diversifying will help you to minimise your investment risks. Smart working entails you have your risks spread in different sectors. If your investments in a sector fail, your investments in other areas will help to mitigate the effect of your loss. There are many reasons why you should diversify: loss of business, inflation, taxation, government policies and political instability are a few of the reasons why you should never remain in a single sector as an investor
14. Create passive income:
This is a key to financial freedom. To build passive wealth, you must be involved in activities or buying assets that generate you more income. To boost your personal finance this year, start engaging in activities that will generate you income even when you are not seriously working. Leverage on technology and get involved in online businesses, invest in viable businesses and watch your income compound
15. Learn the rules of investing:
That you want to diversify and create passive income does not mean you should not follow the rules of investing. The first rule of investing is that you should never invest in what you don't understand. Get adequate knowledge before plunging your hard-earned money. The second rule is that you should never invest money you cannot afford to lose. Investment can be a risky venture, so have liquid cash you can fall back to if the investment fails. There are other rules you should learn such as the principle of compound interest, legal framework of what you are investing in, and so on.
16. Engage in your passion and have fun:
Some people are miserable because they are not doing what they love. Some are stuck in jobs they hate just for the salary. To do great things in life, you must be passionate and enthusiastic about what you do. I love providing business and financial solutions to people who need them. It gives me joy. Learn to be passionate about what you do. That is when you can have fun and enjoy life to the fullest. Not loving what you do can drive you to make poor financial choices. If you hate what you are presently doing, here is a tip: give yourself sufficient time to properly invest in what you are passionate about. Then move on.
17. Exercise to keep both your body and mind in shape:
Engaging in physical exercise keeps your mind at alert and your body in great shape to take on any physical activities.
18. Take your health seriously:
All your goals in life will go as far as your health permits. Your health is your number one wealth; therefore you shouldn't be careless with your health.
19. Be flexible and always adjust:
We all want to appear to be in charge, that we have planned ahead and are ready to take hold of our financial situations. However changes will occur along the way, some of them beyond our control. The people who take biggest control of their personal finances are people who adjust to favorable evolving trends. They are spontaneous in their approach towards life. The danger of being rigid is that you are not open to new ideas and opportunities. You are stuck with your viewpoint, with your personal understanding of doing things which may be what is limiting you. Surround yourself with intelligent people who support you as well as who can challenge your thinking.
20. Work smart:
Have you noticed that while you are stuck in your 9-5 job for a few thousands every month, another person works few hours and earns far higher than you? The rule of the 21st century is working smart. While I loathe laziness and cannot encourage it, yet your hard work should be embedded in working smart. Think of disruptive ways you can engage the public that will generate you more income. Do you have large following on social media? You should leverage on that and promote your passion. Create reasonable awareness. The more awareness you create, the more people that need your services will seek you out. You don't have to wait for the big bucks to come to you so you can rent the best office space. Take advantage of technology and start with what you have. Today, you just need a mobile and a social media account.
21. Leverage on technology and automate savings:
This is the age of technology and everything is going digital. You cannot afford to keep living an analogue lifestyle. Get accustomed with the various available technologies that can help boost your personal finance this year. You can automate your savings and spending so that you don't exceed your savings plan
22. Get involved in Philanthropy:
I believe that giving is an effective way of receiving. There is fulfillment that comes with helping people around you to be better than they were. It is about doing the little things to improve the circumstances of those around you. You can engage in serving your community. If you have enjoyed some excellent services from a startup, you can help that business survive by a little words of mouth marketing. Doing such little things go a long way to impact on your personal finance as you will be seen as a trustworthy person whose recommendation is genuine, and this is amazing for you mentally and your business if you have one
23. Have a retirement plan in place:
Some people think retirement is working for decades and retiring to a life of pension. Retirement is planning for a life of less stress at work, not that you stop work altogether (unless you want to). Even if you own a company, you should give way at some point for younger, more dynamic leadership while you take on the overseer's role. So what are your retirement plans? Do you have insurance in place? How about retirement savings account? Have you buried your finances in different investment portfolios that will generate you income in years to come? Do you have any shares or stock holding, and more especially, do you have any real estate investment? Have you taken time to study about some government policies in your country and even study some government introduced financial incentives to know if it's a risk worth taking? I have seen some people go broke after retirement because of lack of adequate planning.
24. Have a mentor:
I believe so much in the power of imagery. You can only conceive an idea after you have built images
in your mind. That is what mentorship does to you. Whatever financial race you are in today has been won in the past by
another. So make a mentor out of that person. Use their struggles and triumphs as a guide so that you can arrive faster at your
destination than they did. There is no point making some mistakes if they can be
avoided.
25. Start today, it's never too late:
Finally, it is never too late to start planning towards your financial independence. You can start putting in the hard work now and realise the benefits later. The danger is in not starting at all.
Article Source: https://EzineArticles.com/expert/Isioma_Isichei/2515969
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